All Forum Posts by: Bill Pate

Cover all your bases, and don't give the furniture to the Salvation Army.  Put the furniture in storage and send the keys to the broker via signed receipt.  Then he can't claim you discarded the furniture and he retains possession.

I would really recommend waiting until the property goes through foreclosure and get listed back on the MLS. There can be so many hiccups with trying to buy the property pre-foreclosure it could leave you with a really bad experience. Saving 100k doesn't seem that difficult to me. If you save money on a regular basis and save for a few years you would be amazed how you can save up 100k faster than you think especially with returns from investments.

I would get a quote to repair it from a qualified contractor and then deduct that from the sale price.  If the property is being bought as-is then just make sure you figure in the price of the fix into your investment numbers.  As long as the returns are still what you want with the repairs then buy it.  I wouldn't try to eyeball the cost of the repair.  Get an accurate estimate and it takes the ambiguity out of the equation.

In my experience they will require you to have 6 months of all expenses on hand in cash to write the loan. In other words 6 months of mortgage, taxes, and insurance. I tried extensively to get a primary mortgage or a HELOC on a rental property I own free and clear. In the end it was better to just get a personal loan. I pay more in interest, but the obstacles to getting the loan were considerably less. The personal loan interest rate is only 7% and a heloc or mortgage would have been about 4%. This wasn't a big enough of a difference for me to not take the personal loan.

Hi,

I am looking at a Triplex in Elyria, Ohio. The house has been vacant for a while, and is in need of some major repairs. The house has been condemned, but I am working with the building department to find out what would be needed to bring it up to code. I own a duplex literally right around the corner, so I know how much the rent from each unit will bring. I don't know all the details about the house just yet. It looks to be possibly (1) 2 bedroom unit, and (2) 1 bedroom units. After working with the building department I believe I might be able to get the city to deed me the house for $1 if I agree to bring it up to code. Not sure what kind of time frame is involved. My first estimates are to bring the house up to code would cost approximately $35-40k. After all renovations the house would probably bring $1400 a month in gross rent receipts at the least and $1600 at the most. Personally I would buy the property and see to all the renovations. I wanted to gauge interest in taking a partner to share in the ownership, renovation costs, and monthly rent profits. I would manage the property myself and all three units would be rented meaning I would not occupy one of the units myself. I have owned a property management company for the last 10 years and have my process for finding good renters down pat. Basically my plan was to fix any issues on the outside of the house first such as windows, roof, gutters, etc. Then to renovate one unit at a time starting with the two bedroom. Once the two bedroom is completed rent it out and start on the other units. I am only willing to take on one partner on this deal and we would split all costs and profits down the middle. The property taxes are $1225 a year and most likely we would have to pay water, sewer, and trash which would be $240 a month most likely(my duplex is $160). Each unit has it's own electric meter. A dwelling policy for the house would not be more than $800 a year. So property taxes would be $102, W/S/T would be $240, and insurance would be $70, then figure ten percent for maintenance and vacancy which comes to $140 a month. Expenses would be no more than $550 a month so NOI would be right around $900 a month. This leaves about $450 per month per partner on a $20k investment. That works out to approximately 27% return. The neighborhood is about a C to C- neighborhood. My estimation from the time of purchase until the time of completion of all units would be about 8 months total. This would basically be a passive investment for my partner and we could probably work out a buy-out clause after a period of time if necessary.

-Bill Pate

@Account Closed sure we can. Keep in mind I only buy distressed properties such as bankruptcy, foreclosure, REO, or medicaid sale. That's the only way I can get the prices I have been. All three condos I have bought were really in good shape and needed less than $500 each in repairs before they were rent ready. My calculations don't take appreciation into account because I don't ever plan to sell the properties. I am looking purely for retirement income, so I don't ever see a need to sell.

@Walter Roby jr it has been kind of a mix. I have only had three that required extensive rehab. I am a value investor, so I look for properties that I calculate will return at least 20% ROI per year. My worst performing property is my first one. That house I did over 40K in rehab and I make $60 a month. I became a landlord out of necessity, but I realized two things. I live in just about the cheapest real estate market in the country and chances are prices will never be better than they are right now in my lifetime. So, I decided to use my competitive advantage(thanks econ 101) to make calculated investments. My first property was turned into a rental out of necessity because I tried to sell it in 2007 when I got married. It sat on the market for over a year with no offers. I put it up for rent and it rented in two weeks. It's a small two bedroom cottage and one of the bedrooms doesn't have a closet, but it makes a great rental. After some quick math and one failed attempt to buy a condo I have bought 6 rentals in 18 months. Paid cash for all of them and the worst performing property is 12.5% ROI and the best is 40%. Math doesn't lie. I use math as my distinguishing factor when I decide to invest. Always account for insurance, taxes, maintenance, and vacancy. If I can't make at least 20% after that I won't buy. No I don't take on partners because they come with expectations. My money my success. If I screw up I pay for it, and if I don't I make good money. So far I have been very pleasantly surprised. I have not had one eviction or missed rent payment in 10 years. I score prospective tenants like an insurance company based off of rent history, credit, criminal, income, and evictions. Using this method I have never had to go to housing court. I give good service and I don't take any crap. I am going to community college this semester to get my real estate agent license. Once I get enough transactions under my belt I will get a broker's license so I can manage other investors properties. I cut my teeth on my own experience and have built a proven system. I know several local contractors that do good work for cheap, so I think I can be a real value add for local and out of state investors.

25735 Lorain Rd

Unit 306

North Olmsted, OH 44070

I bought a condo for $14000 and it rents for $640 a month which comes out to 4.57%...

Keep in mind this is one of my best performing property and I basically was in the right place at the right time, but sometimes all it takes is luck.

116 Water St

Elyria, OH

I bought for $24000 and I get a combined $1100 a month which comes out to 4.58%... I love the Cleveland market. North Olmsted is a B+ neighborhood with good schools. Elyria is a C- neighborhood with OK schools. I also have another condo in Broadview Heights, OH that gets 2.3%, a SFR in Elyria that gets 2.1%, and a condo in Avon Lake that gets 2.6%. Broadview Heights and Avon Lake are A- to A+. Avon Lake is really a beautiful community and one of the nicest suburbs on the westside of Cleveland with truly excellent schools. Every property I have bought takes hours of painstaking research and work. Some were basically turnkey others took extensive rehab. I do a lot of the work myself and yes it's a job, but one I make good money at. My primary occupation is as a network engineer for a local company.

Good luck. I have been a REI for 10 years and I am just now at $50k. You need to have at least 10-12 properties in your portfolio to get that much income and they need to be performing properties. @David Thompson is correct.  You would need about $750k at 10%.  Personally I have about $250k at 20%, but this is only after really carefully building my portfolio over the last decade.  My primary source of income comes from my job, and REI is a part-time gig.  Definitely plan to make it full-time as I am currently taking classes to get my real-estate license.  I am going to work part-time as an agent until I meet the requirements to get a broker's license.  Then I will move into property management full-time.  Good luck.

Do it face-to-face.  Then send a certified letter as a chaser.  Just tell them "I had to make a business decision and as long as you leave the property in good shape I will return your entire security deposit."  I have found it's better to deliver bad news in person, so they don't get the letter and an ambush.  It's better to get one to the head than five in the chest and bleed out.  Tough people make tough decisions, but do it with respect and I have never found a tenant who is not understanding.